Debt

Hadas: Renewed growth tests old economic theories

14 Feb 2018

A slight rise in U.S. wage growth threw markets into fits. Investors believe some long-suspended economic patterns are finally kicking in. Then low unemployment will bring higher inflation and bond yields, and ease voters’ angst. But the old rules may just not work anymore.

Steinhoff reminds creditors they are not all equal

1 Feb 2018

The scandal-hit retailer is planning early repayment of a $1.3 bln South African bond in return for releasing funds to cash-strapped European brands. Other mainly international creditors will be asked for waivers. It’s an early indicator of the unofficial pecking order.

New-look Noble Group has a fighting chance

30 Jan 2018

A tentative deal with creditors would halve the Hong Kong commodity trader’s $3.4 bln of senior debt and give them 70 pct of the company. With a healthier capital structure, and fat incentive packages in place, it’s up to management to put years of dismal performance behind them.

Chinese angels keep Wanda’s IPO dream alive

30 Jan 2018

A Tencent-led group will pay $5 bln for a stake in the indebted conglomerate's property arm. The money buys boss Wang Jianlin precious time to execute a relisting in Shanghai. This new alliance could help clear regulatory hurdles too. What the allies get out of it is less clear.

Uber plan highlights SoftBank’s addiction to debt

25 Jan 2018

The Japanese group might raise funds by borrowing against its shares in the U.S. ride-hailing app, or in British chip designer ARM, a report says. That’s plausible: SoftBank prefers maximum financial firepower. Extra layers of leverage will introduce fresh complexity and risk.

Hadas: Carillion and the danger of low prices

24 Jan 2018

Debt-heavy UK contractor Carillion collapsed because it wasn’t charging enough. Uber can keep distorting taxi markets with loss-making fares until its backers lose hope. And Amazon’s cross-division support unfairly harms competitors. Cheap prices can cause expensive trouble.

Breakdown: Why Steinhoff’s complexity may save it

24 Jan 2018

An accounting scandal has exposed the retailer’s warren-like structure. Creditors who are owed close to 11 billion euros face a fight for repayment. But the prospect of a messy restructuring may help keep Steinhoff afloat for now. Breakingviews offers a guide through the maze.

Perfect storm blows ill winds across Chinese tech

24 Jan 2018

Hubris, margin loans and starry-eyed investors have led to a cash crunch at $9 bln Leshi. The video-streaming and smart-TV arm of embattled LeEco is now chasing its founder, "China's Steve Jobs," for money he owes it. Bad behaviours that converged here will turn up elsewhere too.

Markets start doing Mario Draghi’s job for him

12 Jan 2018

The euro hit three-year highs and government bond yields rose after a hint the ECB boss may rethink how long ultra-loose policy will last. The moves amount to tighter monetary conditions. That buys rate-setters time to phase out negative rates even though growth is picking up.

HNA’s hard job: put the M&A machine into reverse

12 Jan 2018

The acquisitive Chinese group has been buffeted by regulatory setbacks and signs of financial stress. Now trade in two key listed units in China is halted, suggesting a corporate reshuffle could be looming. HNA will find shrinking back to health tougher than breakneck growth.

Intesa can afford to speed bad debt cleanup

11 Jan 2018

Italy’s biggest retail bank may sell up to 15 bln euros of sour loans. It looks like a reversal of boss Carlo Messina’s plan to keep bad debts rather than sell them cheaply. But Intesa can take the hit and, with regulators bearing down on dud assets, a quick exit makes sense.

Hadas: Fiscal debts are not our children’s burden

10 Jan 2018

When this generation dirties the water, the next has to pick up the tab. Debt is different. When governments borrow from taxpayers, the children will both pay the bill and enjoy the proceeds. The real deficit dangers lurk in foreign debt and distributional distortions.

British shoppers are a shaky economic backstop

8 Jan 2018

Consumer spending on Visa cards in 2017 was the weakest in five years. Profit warnings from retailers Mothercare and Debenhams add to the glum outlook. Despite easing cost inflation and a tight job market, customers who have kept the UK economy moving are becoming less reliable.

Greek banks’ sour loans face reality check in 2018

5 Jan 2018

Lenders plan to shrink their bad debts by 37 pct over two years, including through sales. A recovering economy and falling government bond yields should help. But without a clearer picture of what buyers might pay, shareholders have little clarity over how much pain lies ahead.

Breakingviews predicts a frothy, frustrated year

5 Jan 2018

Money is cheap, the global economy is motoring, and tech is reshaping the world. Populism is still driving discord and uncertainty, but markets are ebullient. From elections to electric cars, we offer a series of insights into what 2018 has in store for companies and economies.

Beijing will allow a local government default

5 Jan 2018

Despite a long campaign to rein in rampant off-balance sheet borrowing by cash-strapped regional authorities, the practice remains pervasive. Next year officials will tolerate the once-unthinkable: a bond default. That will rattle fixed-income investors onshore and off.

Viewsroom: Debt markets set for wild ride

4 Jan 2018

More government borrowing and less central bank buying will force bondholders to fend for themselves, Breakingviews predicts. Plus, passive funds will force out a CEO, electric vehicles give gasoline cars a run for their money and soccer clubs’ spending splurge will intensify.

Ambani’s debt cure is no elixir for shareholders

28 Dec 2017

Anil Ambani says he has rescued his Reliance Communications with a $6 bln firesale. That’s a relief for lenders, assuming buyers turn up as promised. But it’s not the moral victory the tycoon claims. Even if creditors play ball, investors are left with a much diminished company.

Ebenezer Scrooge is ripe for shareholder activism

22 Dec 2017

Companies are swerving toward more active corporate giving and better conditions for workers. Investors should be pleased, but they might also have to recalibrate their idea of what makes a good company. One activist fund in particular isn’t feeling the festive spirit.

Chinese government debt will go global

21 Dec 2017

A major index will include Chinese government bonds in 2018, dragging foreign money into a $9 trillion market. Beijing will appreciate the foreign stamp of approval. But sovereign guarantees will give scant cover against volatility spreading outwards from corporate credit.